EXHIBIT 99.1 CROWN VANTAGE INC. UNAUDITED PRO FORMA FINANCIAL STATEMENTS SALE OF BERLIN-GORHAM FACILITIES The following Unaudited Pro Forma Condensed Statements of Income for the three months ended March 28, 1999 and for the year ended December 27, 1998 and the Unaudited Pro Forma Condensed Balance Sheet as of March 28, 1999 give effect to Crown Vantage Inc.'s (the "Company") sale of its pulp and paper mills in Berlin and Gorham, New Hampshire ("Berlin-Gorham") to American Tissue Inc. ("American Tissue"). Proceeds from the sale of Berlin-Gorham to American Tissue totaled $45 million in cash plus the assumption by American Tissue of certain liabilities. The pro forma information is based on the historical consolidated statements of the Company after giving effect to the pro forma adjustments described in the Notes to the Unaudited Pro Forma Condensed Financial Statements. The pro forma financial data are not necessarily indicative of the results that actually would have occurred had the sale of Berlin-Gorham to American Tissue been consummated on the dates indicated or that may be obtained in the future. CROWN VANTAGE INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME 12 MONTHS ENDED DECEMBER 27, 1998 (amounts in 000's except per share amounts) HISTORICAL HISTORICAL CROWN BERLIN- PRO-FORMA VANTAGE GORHAM (a) ADJUSTMENTS PRO-FORMA ---------- ----------- ----------- ----------- Net Sales $ 850,994 $ (162,873) $ 19,981 (b) $ 708,102 Cost of Goods Sold 796,935 (176,202) 17,583 (b) 2,074 (c) 640,390 ---------- ----------- ----------- ----------- Gross Margin 54,059 13,329 324 67,712 Asset Impairment and Other Charges 163,834 (143,632) 20,202 Selling and Administrative Expenses 62,360 (4,115) (d) (640) (e) (2,300) (f) 55,305 ---------- ----------- ----------- ----------- Operating Income (Loss) (172,135) 156,961 7,379 (7,795) Interest Expense (64,672) 2,479 (g) (62,193) Other Income, net 1,400 (85) 1,315 ----------- ----------- ----------- ----------- Income (Loss) Before Income Taxes and extraordinary item (235,407) 156,876 9,858 (68,673) Income Tax Provision (Benefit) (75,912) 77,903 (h) 1,991 ----------- ----------- ----------- ----------- Net Income (Loss) before extraordinary item $ (159,495) $ 156,876 $ (68,045) $ (70,664) =========== =========== =========== =========== Loss per share before extraordinary item $ (16.79) $ (7.44) Average common stock and common stock equivalents 9,502 9,502 CROWN VANTAGE INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME 3 MONTHS ENDED MARCH 28, 1999 (amounts in 000's except per share amounts) HISTORICAL HISTORICAL CROWN BERLIN- PRO-FORMA VANTAGE GORHAM (a) ADJUSTMENTS PRO-FORMA ---------- ----------- ----------- ----------- Net Sales $ 201,165 $ (40,125) $ 5,037 (b) $ 166,077 Cost of Goods Sold 193,043 (38,293) 4,432 (b) 468 (c) 159,650 ----------- ----------- ----------- ----------- Gross Margin 8,122 (1,832) 137 6,427 Asset Impairment and Other Charges 16,175 (16,175) Property Tax Accrual Reversal (8,957) 8,957 Selling and Administrative Expenses 15,424 (981) (d) (160) (e) (575) (f) 13,708 ----------- ----------- ----------- ----------- Operating Income (Loss) (14,520) 5,386 1,853 (7,281) Interest Expense (15,552) 620 (g) (14,932) Other Income, net 142 (21) 121 ----------- ----------- ----------- ----------- Income (Loss) Before Income Taxes (29,930) 5,365 2,473 (22,092) Income Tax Provision 432 (42) (h) 390 ----------- ----------- ----------- ----------- Net Income (Loss) $ (30,362) $ 5,365 $ 2,515 $ (22,482) =========== =========== =========== =========== Loss per share $ (2.93) $ (2.17) Average common stock and common stock equivalents 10,351 10,351 CROWN VANTAGE INC. UNAUDITED PRO FORMA CONDENSED BALANCE SHEET MARCH 28, 1999 (amounts in 000's) HISTORICAL CROWN PRO FORMA VANTAGE ADJUSTMENTS PRO FORMA ---------------- ----------------- --------------- ASSETS Current Assets Cash $ 11,230 $ 11,230 Inventory 72,775 72,775 Asset held for sale 45,000 $(45,000) (a) Other current assets 56,531 56,531 ---------------- ----------------- --------------- Total current assets 185,536 (45,000) 140,536 PP&E, net 378,664 378,664 Other assets 80,288 80,288 ---------------- ----------------- --------------- Total assets $ 644,488 $(45,000) $ 599,488 ================ ================= =============== LIABILITIES Current liabilities $ 97,520 $(17,000) (g) $ 80,520 Long-Term liabilities Long-term debt 585,423 (28,000) (g) 557,423 Post retirement benefits 85,084 85,084 Other long-term liabilities 45,336 45,336 ---------------- ----------------- --------------- Total liabilities 813,363 (45,000) 768,363 Shareholders' Equity (Deficit) Common stock and other 45,831 45,831 Retained deficit (214,706) (214,706) ---------------- ----------------- --------------- Total liabilities and deficit $ 644,488 $(45,000) $ 599,488 ================ ================= =============== CROWN VANTAGE INC. NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS (a) Elimination of Berlin-Gorham's historical income statement and net assets held for sale on the balance sheet. The Unaudited Pro Forma Condensed Income Statements are presented assuming the sale occurred at the beginning of the periods presented. The Unaudited Pro Forma Condensed Balance Sheet is presented assuming the sale occurred on the balance sheet date. (b) Effective with the sale of Berlin-Gorham, the Company entered into a three year Strategic Alliance Agreement ("SAA") with American Tissue that provides that the Company retains the rights to certain grades of paper critical to its uncoated printing and publishing papers strategy. Berlin- Gorham will continue to manufacture these papers on behalf of the Company. The Company will market these grades (a minimum of 20,000 tons per year) and collect a commission based on the net sales price of these grades. The pro forma adjustment was calculated by applying the contractual commission to actual net sales of these grades for the periods presented. (c) Effective with the sale of Berlin-Gorham, the Company entered into a three year Pulp Purchase Agreement ("PPA") that provides for the purchase of 40,000 tons of pulp from Berlin-Gorham at a discount off of quoted market prices. The pro forma adjustment reflects the estimated cost difference between the historical transfer costs of pulp from Berlin-Gorham to the Company's other mills and the estimated costs under the PPA. (d) Effective with the sale of Berlin-Gorham, the Company entered into a three year Paper Brokerage Agreement ("PBA") that provides for the Company to continue marketing and selling certain uncoated freesheet papers manufactured by Berlin-Gorham not covered under the SAA (estimated at 130,000 tons annually). The Company will collect a commission on these sales based on the net sales price. The pro forma adjustment was calculated by applying the contractual commission to actual net sales of these grades for the periods presented. (e) As a result of the sale, management estimates that average accounts receivable eligible for sale under its securitization facility would have been reduced by approximately $8 million for the periods presented. The estimated reduction is approximately the same for all periods presented. This will result in a corresponding decrease in selling and administrative expenses associated with this facility. (f) The Company has agreed to provide certain transition services for Berlin- Gorham. The transition services agreement provides for reimbursement to the Company for certain general and administrative costs. The reimbursement is contractually set at a rate per month based on the estimated costs to the Company to perform these services. (g) Reduction in interest expense reflects the pay down of term and revolver debt based on the estimated net proceeds from the sale. Net proceeds available for debt reduction is estimated to be $28 million with a minimum prepayment of $10 million to Term Loan B and the remainder to the Revolving Credit Facility. The amount of net cash proceeds available for debt reduction would not have materially varied for the periods presented. Cash proceeds of $45 million from the sale are reduced by transaction costs and certain current liabilities of Berlin-Gorham retained by the Company. Net proceeds available for debt reduction are calculated as follows (amounts in millions): Cash proceeds $45.0 Transaction fees 1.8 Accounts payable and accrued liabilities 15.2 ----- Total $28.0 ===== (h) The pro forma adjustment gives income statement effect to a valuation allowance against deferred tax benefits recognized for the period ended December 27, 1998. The adjustment also eliminates state and value-added taxes pertaining to Berlin-Gorham.